Share Capital / Statement of Capital

The share capital or statement of capital represents the nominal value, currency and voting particulars associated with the shares in a limited company. The capital can be made of more than one class or denomination of share.

The purpose of the share capital is really to enable the company to be divided up in terms of ownership and control. The shareholders are granted options over the shares and the percentage of issued shares they own represents their holding in the company.

From October 2009 the Companies Act removed the requirement to set an authorised limit to the number of shares created. Most British companies have shares denominated in 1 pound sterling, but really this can be any value you choose.

If two shareholders each have one share then they own 50% of the company as they each own 50% of the total issued share capital. If one shareholder owns three shares and the other owns one share the split is 75% and 25% respectively.

If my company has issued £1000 of shares does this mean the shareholders have to immediately pay £1000 to the company?

No. When the shares are allotted to the company's shareholders then you can decide whether you wish the shareholders to physically pay the value of their shares into the company account, otherwise the shares can be treated as paid up' and no money will change hands.

It is important to note however that if the shares are not paid up at the point of incorporation, the shareholder will remain a debtor to the company until such time that the money is physically paid.

Is there a limit to how many shares I can create and the value of these shares?

As of October 2009 there is no upper limit to the number of shares you can create. The nominal share value is also unrestricted.